Our weekly crypto derivatives analytics report delves into macro events; the current state of crypto and trading signals from spot trading volume; and futures, options and perpetual contracts.

At the start of the week, Bitcoin showed signs of decoupling from US equities. However, US president Trump's positive remarks about the US-China trade war (which had included a 145% tariff on Chinese goods) triggered a relief rally across markets. As a result, BTC has resumed moving up with US equities. 

This rally has led to a rise in short-tenor implied volatility and a recovery in BTC’s put-call skew, indicating that traders are seeking upside exposure.

Please check out the report’s highlights.

Perp open interest rises across the board

Perpetual open interest increased significantly this week across various tokens, especially ETH. Perpetual trading volumes also rose. Notably, Ap 7, 2025 recorded the highest trade volume of the month, following Trump's comment, "Forget markets for a second, we have all the advantages."

BTC option open interest shows a mixed picture; put-call skew in short tenor sends positive signals

President Trump’s recent willingness to negotiate a trade deal with China’s President Xi triggered a relief rally across asset classes, including crypto. Bitcoin had already risen 7% since Apr 21, 2025, prior to Trump's comments. Despite this rally, open interest in puts has outpaced calls, with options volume remaining relatively balanced. 

It's unclear if the demand for puts reflects a hedge against downside risks, or a bet against the upward movement. Meanwhile, perpetual funding rates are providing limited insight into sentiment. However, the recovery of the put-call skew at short tenors indicates that traders are seeking upside exposure to the rally — and are willing to pay for it.

ETH unexpectedly outperforms BTC in this relief rally

ETH's response to the recent crypto market recovery has diverged from previous trends: it outperformed BTC in spot prices, a rarity in past rallies, and open interest in calls exceeds that in puts — opposite to BTC's trend. In addition, ETH call open interest is nearly double that of puts, with calls dominating options volumes. This suggests traders anticipate ETH will reduce its significant underperformance against both BTC and other “ETH killers” like SUI and SOL. Additionally, the spot rally has led to another term structure inversion for ETH.

Advanced

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Bybit X Block Scholes crypto derivatives analytics report (Apr 24, 2025): Put-call skew recovers at short tenors, showing reviving sentiment

Explore all the hottest Bybit events happening during the week of TOKEN2049 Dubai in this article.

It’s that time of year again — TOKEN2049 Dubai is back, and the city is buzzing with excitement. As one of the most anticipated events on the crypto calendar, it’s not just about the main conference; it’s about everything happening around it, too. From side events and workshops to exclusive mixers and demo days, Bybit is showing up in full force this year. Here's your inside look at what to expect during this action-packed week.

The heart of TOKEN2049 Week, TOKEN2049 Dubai promises two full days of future-facing discussions and innovation in the world of crypto. At the center of it all is Bybit’s immersive booth experience, built on the theme 

. It’s not just a theme — it’s a vibe. Picture claw machines, 

If you’re heading to TOKEN2049 Dubai, be sure to drop by the Bybit booth (located at P33) and chat with our extraordinary Bybit team! And don’t miss your chance to grab a gacha token by scanning our QR code with Bybit Pay. You could walk away with exclusive Bybit merch! 

DMCC x VARA: Crypto regulations and business growth

Policy meets progress at this exclusive evening event co-hosted by DMCC and VARA. This gathering brings together regulators and industry leaders for an open discussion on the future of digital asset compliance and business growth in the region.

You can expect sharp insights, candid perspectives and forward-thinking dialogue about what it really takes to scale a crypto business in a regulated environment. If you care about the future of web3 in the UAE, this is one event to mark on your calendar.

Bybit After Hours: Exclusive Insights & Networking 

 is a private cocktail evening for top-tier traders and long-time supporters of Bybit. This event is equal parts networking, knowledge sharing and celebration.

 to strategic conversations with the Bybit team, this night is tailored to those who trade big and think bigger. With an invite-only guest list, it’s set to be one of the most exclusive experiences of the week.

The Crypto Hub x Bybit Crypto Ark Demo Day

 is all about bringing hands-on energy to the web3 scene. Hosted at the Crypto Ark inside Bybit’s office, this event welcomes founders, devs and crypto creatives for a casual evening of product showcases, idea exchange and light networking.

While Bybit provides the space, the real spotlight is on the community — those shaping the next wave of innovation in web3.

 from across the CIS region are gathering for a deep dive into the tools, tips and strategies that drive growth at Bybit. This meetup goes beyond surface-level sharing — expect actionable workshops covering our Bybit Affiliate program and affiliate best practices.

It’s also a chance to hear directly from Bybit product leads and regional managers, share success stories and walk away with fresh ideas to maximize conversions. 

Wunderbit x Bybit: “Hey, Trading Bot, where is my profit?”

 are here to stay — and this event is going deep into what makes them tick. Co-hosted by Wunderbit and Bybit, the evening workshop blends honest stories from real traders with expert insights on how to avoid common automation pitfalls.

From bot setups that work to the ones that quietly drain your profits, this is your chance to ask the tough questions, hear unfiltered answers — and maybe rethink how you’re running your own bot strategy.

 (RWAs) are taking center stage at the RWA Gulf Summit, a high-powered event co-hosted by Qatar National Bank, Commercial Bank International and DMZ Finance. This summit brings together bank leaders, wealth funds, participants in DIFC, institutional investors and industry pioneers to explore the evolution of tokenized finance in the Middle East and beyond.

Bybit’s Head of Financial Products Jerry Li will take the stage to discuss how 

 (CEXs) can harness RWAs for enhanced yield and 

Dubai's Pinnacle Mixer: Mantle, Mirana, Bybit and Ethena

High above the city, this mixer brings together some of the biggest names in web3 — Mantle, Mirana, Bybit and Ethena. Expect an unforgettable evening of casual chats, cross-chain connections and cocktails with the minds behind some of today’s most innovative projects.

This private event is all about experiencing Bybit Pay in action. See interactive demos, grab a sneak peek at upcoming partnerships and network over bites and drinks. It’s a rare behind-the-scenes look at the way Bybit is shaping the future of crypto payments. 

Wrapping up the week is the Bybit Institutional Symposium — a full-day event dedicated to aligning strategies with institutional clients and forging new collaborations. From macro views to product deep-dives, this conference is built to spark big conversations among serious players.

The day concludes with a gala dinner, a fitting finale to a week in which ideas, connections and innovation have taken center stage.

Intermediate

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Highlights: What to expect at Bybit (Apr 28–May 2, 2025)

Balance (EPT) is revolutionizing web3 gaming with evolving AI companions, blending blockchain, strategy, and intelligent gameplay in one powerful platform.

Artificial intelligence (AI) agents are a key growth area within the blockchain industry. Projects like Artificial Superintelligence Alliance (FET), 

 (AI16Z) and countless others have been essential components driving the overall crypto market. As of April 2025, the CoinGecko portal lists more than 500 cryptocurrencies within its category of AI Agents. These intelligent assistants are now helping individuals and businesses analyze markets, create textual and visual content, automate work processes and trade profitably.

There's a further area where AI agents on the blockchain are flourishing: the world of 

 gaming. In this sphere, bots and agents based on AI algorithms are helping users develop the best in-game strategies, succeed in the competitive world of play-to-earn (P2E) and overcome key challenges in complex gameplay.

Balance (EPT) is a blockchain gaming project that takes the use of 

 to a completely new level. The creation of the team at the world’s largest social gaming platform, E-Pal, Balance offers players AI agents that can aid them in the in-game environment and serve as their personal companions. Based on a multi-layer architecture, the platform offers some of the most cutting-edge use cases for gaming-oriented AI agents.

 (EPT) is a web3 gaming platform that allows players to easily create, own and use AI companions within the blockchain games it supports.

 Balance supports a variety of first-party (internally developed) and third-party web3 games. You can deploy your AI gaming companions and they’ll act as your assistants, friends or co-players within Balance games.

Using Balance.fun, the platform’s primary web interface, you can create your AI agents and specify various details, such as appearance, personality and functions.

Balance isn’t just another obscure crypto gaming platform. The origins of the project date back to 2020, when the E-Pal social gaming provider was launched by four young California-based technology entrepreneurs — Brian Xiong, Tung Pham, Yuzhe Norris Wang and Yuanzhe Li. E-Pal quickly became a leading force in the newly emerging social gaming field, helping players worldwide find gaming companions. By early 2024, E-Pal had become the world’s largest gaming companion platform, boasting 4.2 million users and 450,000 Epals (gaming companions).

In February 2024, the E-Pal team focused its efforts on 

 and AI technologies, starting the development work on the Balance gaming platform. In September of the same year, Balance went live.

Per the project’s documentation, the platform operates on its own chain, Balance Chain, with 

 (AA) technology used for cross-chain communication. The fungible and 

 (NFTs) held by user accounts are based on the 

A key part of the Balance ecosystem is Key Nodes — purchasable 

 that help with the processing, storage and distribution of data required in the resource-intensive environment of web3 gaming. Some applied instances are the management of real-time leaderboards and the automatic distribution of loot and in-game currency. These nodes can also support the computational requirements of training AI models. As a reward for their work in supporting the platform’s operations, Key Nodes receive a wide range of rewards and benefits, including distributions of EPT tokens, the platform’s native cryptocurrency.

As the ecosystem develops, Key Nodes are envisioned to be involved in governance, 

 launch in September 2024, Balance introduced its Points System, designed to reward early contributors to the platform. During the campaign run in September, users could earn points by completing various specified tasks in various activities, such as joining the project’s social media pages or commenting and reposting.

The 400 users with the best performance in the Points System earned a whitelist spot to receive Pioneer Badge NFTs — distinct tokens that provide owners with early access to games, future campaigns, airdrops and beta testing opportunities. Pioneer Badge NFT holders can also enjoy other benefits, such as premium NFTs and voting rights on the Balance platform.

Balance’s platform provides a set of tools to create and use intelligent companions for Balance-based games. You can design your AI companions by specifying their key traits and behaviors through custom prompts and strategies. The AI agents on Balance can assist you in battles, gaming contests, learning, routine task execution and interactive entertainment.

Balance’s platform is made up of five key layers, each one serving a specific purpose in supporting its user and developer communities. At the top of the architectural stack is the application layer, which acts as the main interface for users to interact with human and AI companions and the wider Balance community.

The application layer also contains the AI Battle Reporting System, which is designed to give users feedback and analysis tools on their performance in the platform’s gaming ecosystem. AI technology is leveraged here to provide personalized analytics and performance improvement recommendations.

A range of NFTs are also part of the layer. These include in-game asset NFTs, as well as 

 (SBTs) that serve as summaries of the holder’s achievements.

The platform layer hosts the various games within the Balance gaming universe. These include both internal games and third-party games that have partnered with Balance. The key concept uniting all of the games is the active integration of AI companions and AI players, making the platform a unique environment in which humans and AI agents play, interact and compete.

The platform layer also features an AI-driven NFT launchpad that offers a rich tool set for creating personalized NFTs for games and applications. These NFTs can be traded on Balance's NFT marketplace, which is also an integral part of the platform layer.

The protocol layer includes a trio of critical protocols — the Fans Protocol, Epal Fan Token (FT) Exchange Protocol and Asset Protocol. The Fans Protocol lets players launch and manage their Fan Tokens, creating opportunities for influencers and community builders to tokenize their efforts and launch high-potential crypto assets. Meanwhile, the Epal FT Exchange Protocol facilitates the management of (and trade in) Fan Tokens.

The third protocol, Asset, is used for the comprehensive management of a wide range of digital assets on Balance, providing easy-to-use tools for asset creation and trading.

The token layer is designed for core operations involving the platform’s native EPT token. This layer supports the use of EPT for in-game purchases, access to services and AI companions, Fan Token minting and trading, in addition to other functionalities.

This is the underlying infrastructural layer that powers the platform’s operational mechanism. It can be described as Balance's operating system, and is made up of several critical components: the node system, the Balance 

, the Balance Chain network and the platform's unique ID system.

The node system provides the computational and storage resources to power games and other functionality on Balance. In addition, the system acts as a key connecting medium between Balance Chain and the AA functionality that lets the platform enjoy cross-chain capabilities.

The Balance stablecoin, also part of the infra layer, is designed to reduce volatility and bring rate stability to the platform's gaming ecosystem. The Balance stablecoin system helps players engage in asset trading without the fear of wild market fluctuations, an important consideration in the 

Designed to support multiple chains, Balance Chain operates based on dynamic protocol adaptation, automatically selecting the optimal blockchain platform according to user preferences and needs. This dynamic adaptability is designed to reduce costs, improve operational speed and enhance overall security for users.

The final major component of the Balance infrastructure layer, the Balance ID system, is a unified and secure user authentication and identity management solution. To be introduced later in 2025, the ID system will let users access all services and games within the Balance ecosystem via a single set of cross-platform decentralized credentials. In addition to human players, also AI companions will have their unique IDs.

EPT is the native cryptocurrency of Balance. Although the platform has been operational since 2024, the EPT token was just launched on Apr 21, 2025, with a total and maximum supply of 10 billion. It was issued on two major blockchains — Ethereum and BNB Chain. EPT has a wide range of functional use cases on the platform, including the following:

The EPT token's supply allocation is per the chart below.

 as a swap pair with USDT, and through the exchange's 

 based on USDT. You can also take advantage of Bybit’s campaign dedicated to the token to grab a share of the 

Under the terms of the event, new users can earn EPT rewards by accumulating a deposit volume of at least 3,000 EPT, or by depositing at least 100 USDT and trading 100 USDT worth of EPT via their first spot trade with Bybit. Meanwhile, existing users can qualify for rewards by trading at least 500 USDT worth of EPT on Spot. The event is valid through May 5, 2025, 9AM UTC.

As of Apr 25, 2025, the EPT token has been on the market for only four days, and is trading at $0.0117, which is 26.4% lower than its ATH of $0.01708 on Apr 21, 2025, and 11.4% higher than its ATL of $0.01129 on Apr 22, 2025.

Long-term price forecasts for EPT are mostly bullish. DigitalCoinPrice 

 of $0.0412 in 2027 and $0.0615 in 2030, whilePricePrediction 

These and other emerging long-term forecasts for the token don't constitute investment advice. Given EPT's extremely short history on the market so far, 

 on the token's future prospects, carefully assess market fluctuations within the crypto gaming niche and consider all other relevant factors before investing in it or any other cryptocurrency.

Capturing emerging market trends and sensing the broader market conditions, the team at E-Pal recognized the tremendous potential of gaming companions back in 2020. Four years later, E-Pal realized that the new market dynamics in gaming called for something even more innovative — the use of AI companions, in addition to fellow humans. The resulting product, the Balance platform, is now racing to stake the claim to the best web3 gaming environment supported by AI agents.

The platform's unique features — cross-chain functionality supported by an AA mechanism, a dynamic exchange system that selects the best network for users' transactions and, most importantly, intelligent AI companions — can certainly help establish Balance as a leader in this niche of web3 gaming.

AI agents are taking the gaming industry by storm, with blockchain technology acting as a powerful enabler of these intelligent friends of ours. The Balance gaming universe — supported by the proven track record of E-Pal — has a great chance of becoming the go-to environment in which to befriend your next artificial gaming partner.

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Balance (EPT): Revolutionizing web3 gaming with evolving AI companions

Mantle has launched the Mantle Index Four (MI4), an institutional-grade fund providing diversified exposure to yield-bearing digital assets. 

The S&P 500 rose 2.03% on strong Alphabet earnings and optimism over a possible Fed rate cut. Gold jumped 1.5% to $3,338 as trade tensions rose and a weaker dollar, along with falling yields, boosted demand. Fed rate cut signals also supported the rally. The Coindesk Indices, which tracks the broader crypto market, rose 0.74%, with Bitcoin up 0.06% and Ether down 1.89%, in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today's top performer is INIT, up 15.4%, following the launch of Initia, which aims to revive the appchain concept with an interconnected network and an INIT token airdrop.

Initia (INIT), founded in 2022, is a modular blockchain platform that combines a Layer 1 network with customizable Layer 2 rollups, enabling scalable decentralized app development. It offers flexibility in virtual machines, gas tokens, and transaction systems, while ensuring interoperability and addressing issues like liquidity fragmentation and network congestion. Initia has 

 to revive the appchain concept by offering a network that integrates appchains in a cohesive, interconnected way. The platform emphasizes full-stack control for apps, avoiding fragmentation. Initia is also launching an airdrop with claims available until May 24, 2025. The native token, INIT, has a fixed supply of 1 billion, distributed across eight categories.

Check out the latest prices, charts, and data of 

, an institutional-grade fund providing diversified exposure to yield-bearing digital assets. In partnership with Securitize, which has tokenized over $3B in assets, the fund aims to fill a market gap by offering native yield generation in a traditional fund format. Mantle Treasury has committed up to $400M as the anchor investment. The fund will rebalance quarterly and incorporate DeFi-native staking strategies, such as mETH and bbSOL, while ensuring investor protections. MI4 targets both crypto-native and traditional investors, with Phase 1 rollout scheduled for Q2 2025.

Yesterday, BTC spot ETFs saw a total inflow of $114.7 million, all from non-GBTC funds, while GBTC recorded no flow.

Dolomite, the 10th largest DeFi lending app, is launching a 200M token 

 (20% of total supply) during its TGE on April 24, rewarding users based on platform usage. The DOLO token powers a three-token system alongside oDOLO and veDOLO, enabling incentives, governance, and potential revenue sharing. With over $800M in TVL, Dolomite expands to Berachain, integrating with its Proof of Liquidity system to offer advanced lending features and asset utility.

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Mantle launches MI4 fund for institutional-grade digital asset exposure and yield generation

Trading

The Donchian channel might not be a popular indicator. But, if it's used correctly, the results are quite impressive. Learn more here.

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We use technical analysis indicators to understand the market’s current situation by smoothing out volatility noise and giving them clues about potential future moves. While some indicators focus on the trends and volatility, others usually revolve around a trend’s momentum. However, there is a simple and multifunctional indicator that touches upon all of the mentioned aspects— the 

Yes, this technical analysis indicator is more commonly used in the traditional market, but it’s equally applicable in crypto markets, including derivatives futures trading. In fact, the founder (Richard Donchian) itself is a futures trader, which proves it works exceptionally well for hedging or trade speculation.

Donchian Channel is arguably similar to Bollinger Bands, particularly with its three separate lines. But it mainly focuses on identifying the high and low extremes that may lead to reversals, breakouts, breakdowns, and trends.

All in all, Donchian Channel is a volatility indicator that resembles a fluctuating channel when plotted on the price action. It mainly helps traders to visualize the resistance and support levels based on the recent highs and lows. Hence, enabling traders to understand the volatility of a price better.

The best part? It is one of the simplest trading indicators suitable for novice to advanced traders, and its versatility makes it applicable to all markets, including cryptocurrency.

Of course, you’ve heard of Relative Strength Index (RSI) or Bollinger Bands (BB), but did you know Donchian Channel has already developed about six decades ago by a famous commodity and 

. And the reason it was created is mainly to help traders determine asset’s price volatility and to spot breakouts critically.

However, little did you know this indicator does more than that. Best of all, it also determines the price trend and points to its momentum. And the channels are best to indicate the strength of the current market— 

Even though Donchian Channel is a lesser-known indicator, it does not mean that beginners should ignore it considering how multifunctional it is.

Just like BB, Donchian Channel is also made up of three lines, where the upper and lower bands represent the highest high and the lowest low of the previous period, respectively. While the centerline (median line) shows the average of the current high and low for that given period. The centerline is calculated by subtracting the 

 of a candlestick pattern on a price chart and dividing the result by two for the average. A good note here is the wider the two extreme channels, the more volatile the market is.

But what really differentiates Donchian Channel from Bollinger Bands? Here’s an overview.

First of all, for the untrained eye, Donchian Channel and 

 look almost identical. But beyond the similarities, Donchian Channel is different because it doesn’t require any users’ input for volatility. Another major difference lies in the calculation of these two indicators. While the Donchian Channel indicator displays the highest high and lowest low over N periods, Bollinger Bands display a simpler moving average (SMA) as the middle line and two standard deviations for each of the upper and lower lines. 

In a calmer market, Bollinger Bands are narrower than Donchian lines. However, during extreme volatility, the bands can go beyond the Donchian Channel’s lines. You can check the two indicators overlapping each other – the Donchian Channel indicator has a blue background, while the area of Bollinger Bands is colored with red:

Well, we don’t deny that it’s indeed messy at first when trying to understand Bollinger bands and Donchian Channel’s differences. But you can still notice that the two indicators act a bit differently. Specifically, the bands tend to react more promptly and follow the price, while Donchian Channel is slower, as it remains with the recent high or low until the period is updated. Note that the period for both indicators, in this case, is identical – it’s 20, which comes by default.

Another factor we’re often confused about is the difference between Donchian Channel and Price Channel. Again, most traders love to draw price channels, which are made up of two lines linking the recent highs and lows. However, the Donchian Channel is a bit different because it inclines horizontality while the price channel lines used by traders are always following the direction of the trend in a more visible way.

For example, in the image below, the two green lines represent a bullish channel’s 

 levels. If you check the Donchian Channel, it behaves as if it is lagging.

Both types of channel interpretations can provide accurate buy and sell signals, especially when used combined with other indicators, such as volume or some of the oscillators.

But, if you still doubt if Donchian Channel works for crypto trading, here’s what you must know. Not only this indicator works perfectly in analyzing the extremely crypto volatile market, but it also spots the breakout points for traders to open long or short positions more accurately. 

How to Use the Donchian Channel Indicator in Crypto Market?

Donchian Channel can be used in many ways, as the indicator has multiple attributes. First of all, crypto traders can analyze the market and every aspect of the ongoing friction between bulls and bears. Next, traders would be interested in employing the indicator in the trading process. Precisely, to spot the entry and exit points of long or short positions.

Here are the primary contexts and strategy ideas where Donchian Channel may be used successfully:

Donchian Channel is regarded as a volatility indicator for its capability to display price volatility accurately. By determining the market’s volatility level, you can easily decide whether to open a position or otherwise. Besides, it helps to prepare you to react accordingly to extreme changes. For example, if the price is in an up-trend (bulls) during low volatility, the chances are that the ascending move will continue for a while.

, this is an excellent opportunity to go for a long position. When the volatility increases, the market may become more unpredictable, but this is another great chance to open positions, though the approach should be different.  

One of the most popular ways to use the Donchian Channel indicator is to apply it with breakout trading. However, the two main types are breakdown as trading breakouts of the upper or lower channel lines or trading breaks of the center channel line in both directions. In a nutshell, cryptocurrency traders use it to search for signals to open long or short positions. 

The signals can be observed every time the channel’s upper line goes higher than the previous high, in which case a long position can be considered, or when the lower line goes lower than the previous low, in which case trades go short. In other words, the positions are opened when the price is breaking above or below the extremes of the channel. That suggests the trend will continue in that particular direction for a while. It’s because the upper and lower bands act as resistance and support levels, respectively.

Besides the channel’s extremes, the centerline can also provide decent signals. Suppose a cryptocurrency is trading close to the midline without noticeable deviations toward the upper or lower band. In that case, we may assume that the price is currently experiencing low volatility, and there is no clear trend at the moment. In this case, the channel would narrow.

However, if the market is trending towards the upper band, it makes sense to think about a long position and benefit from the ascending move. If the momentum is inclining towards the lower band, traders can go short.

Of course, the Donchian Channel strategy can be used for any trading asset, including cryptocurrencies. This strategy has some well-defined trading rules, which should delight beginners. For the sake of simplicity, we’ll explain the strategy with the bullish case scenario. Though, it is applicable in bear markets as well. 

According to this strategy, when the cryptocurrency price oscillates within the channel, the market will begin to crawl along the upper line. That can end up with the price breaking above the channel. Now, here are the rules that you should consider for opening and managing a position:

Insert the Donchian Channel indicator into the chart

You should start by placing the indicator on the chart, which is preferably a candlestick one. Most trading platforms and price chart services provide this indicator. The default parameters with 20-periods are ideal for us, so we don’t make any changes to its settings.

 and intraday trading, so you should consider trading on 15-minutes, 30-minutes, and one-hour timeframes. In the first case, the indicator will show the 

of the last 5 hour candles (15 minutes * 20), and so on.

Wait for the price to crawl along the upper line

The next step would be to wait until the price clearly moves along the channel’s upper line for a while. During this period, the price should never go below the centerline (median line). In other words, the price should adhere to the Donchian Channel’s upper side. That demonstrates that the bullish momentum is robust, as demand for the cryptocurrency is increasing. Here are several instances when it happens: 

While you may think that we should go long while the price is crawling along the upper line, our strategy has different rules. Instead, we should wait for a pullback during which the price action moves to the middle. We should open a long position when the price breaks below the centerline or when it touches the lower band.

In fact, you can open a long position when the price pulls back to the middle line and then open a second buy order when the price retreats further to the lower band. If it bounces back right after breaking below the centerline, there is no need for a second buy order. In this way, we will apply an effective risk management technique.

Another important risk management step is to place the stop-loss order, which should be set below the lower band of the Donchian Channel indicator. The 

 will prevent any further loss in the case the price goes against you.

Suppose the bullish trend continues until the end of the day, you should exit the market at the end of the day. As you don’t want to be exposed to overnight risks. Still, the price might correct before the end of the day. And in this case, you will have to exit the market manually or better use a take-profit order, which will help you save time and don’t bother monitoring the trade every minute. For this strategy, you can use a trailing take profit that will move along with the price.

That’s it! You can test the strategy on a demo account before implementing it with real funds. The great thing about it is that it uses several risk management techniques to minimize potential losses as much as possible. As mentioned, you can use the same rules during bearish markets, in which case you will open short positions.

Mistakes to Avoid When Trading with Donchian Channels

One of the biggest mistakes of day traders who use the Donchian Channel indicator is trying to determine the overbought and oversold levels with it, which is wrong. These traders believe that if the price is moving close to the upper band, it means that the market is 

 and should definitely retreat soon. Some traders can even open short positions when the price touches the upper band. However, the uptrend may continue for much longer, leaving the mistaken trader with insufficient funds to maintain the position.

Instead, one can use the Relative Strength Index or the Stochastic oscillator to get better signals about the market’s potential overbought or oversold levels. Otherwise, the trader is likely to blame the Donchian Channel indicator for providing inaccurate or false signals, which is not true.

In conclusion, the Donchian Channel indicator is very similar to Bollinger Bands. In terms of appearance and can be used in multiple ways, which is excellent for both beginners and advanced traders.

Most cryptocurrencies are highly volatile and require adequate indicators to provide a glimpse of the market’s actual state.

Also, you can pay close attention to the strategy that we shared as an example. It has a significant risk to reward ratio and has been tested multiple times on various assets. Still, it would help if you started practicing it on a demo account or checking the historical price. Good luck!

*This article is intended for and only to be used for reference purposes only. No such information provided through Bybit constitutes advice or a recommendation that any investment or trading strategy is suitable for any specific person. These forecasts are based on industry trends, circumstances involving clients, and other factors, and they involve risks, variables, and uncertainties. There is no guarantee presented or implied as to the accuracy of specific forecasts, projections, or predictive statements contained herein.

Users of this article agree that Bybit does not take responsibility for any of your investment decisions

Please seek professional advice before trading.

Explained: What Is Donchian Channel & How To Trade With It?

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